Low Doc vs Alt Doc Loans: What's the Difference and Which Is Right for You?
Low Doc vs Alt Doc Loans: What's the Difference?
If you're self-employed and exploring your home loan options, you've likely come across the terms "Low Doc" and "Alt Doc." While they're often used interchangeably, there are important distinctions.
Low Doc Loans
Low Documentation loans were originally designed for self-employed borrowers who had difficulty providing traditional income documentation. They typically require:
- A signed income declaration
- BAS statements (usually 12 months)
- ABN registered for at least 2 years
Low Doc loans generally have slightly higher interest rates than full documentation loans, reflecting the additional risk to the lender.
Alt Doc Loans
Alternative Documentation loans are a more modern evolution of the Low Doc concept. They offer greater flexibility in the types of income evidence accepted:
- Business bank statements (6–24 months)
- Accountant's letter or declaration
- BAS statements
- Business financial statements
Alt Doc loans are particularly useful for borrowers who have strong cash flow but whose tax returns don't reflect their true income (a common situation for business owners who legitimately minimise taxable income).
Which Is Right for You?
The best option depends on your specific circumstances:
| Factor | Low Doc | Alt Doc |
|---|---|---|
| ABN registered | 2+ years | 1–2 years |
| Income evidence | BAS + declaration | Bank statements, accountant letter |
| Typical LVR | Up to 80% | Up to 80% |
| Interest rates | Slightly higher | Competitive |
The most important step is speaking with a specialist broker who can assess your situation and match you with the most suitable lender.
Contact New Vision Financial Services for expert guidance.